Explained: Shut down of Sterlite Copper plant

Sangeeta Nair

May 29, 2018 14:27 IST

Tamil Nadu Government orders permanent closure of Sterlite plant

The Tamil Nadu government issued an order on May 28, 2018 demanding the permanent closure of the controversial Sterlite Copper factory in Thoothukudi or Tuticorin, which was the centre of violent protests last week that led to the killing of 13 people and left around 100 wounded.

The Government Order (GO) read, “Under Sections 18(1)(b) of the Water Act 1974, in the larger public interest, the government endorse the closure direction of the Tamil Nadu Pollution Control Board (TNPCB) and also direct the board to seal the unit and close the plant permanently.”

The order pointed out that the pollution board in its order dated April 9, 2018 had refused to renew its consent to allow Vedanta Group’s copper smelter plant at Tuticorin to operate.

The order also recalled how on May 23 the pollution board had issued directions for the closure of the unit and disconnection of power supply to it. The power supply was subsequently disconnected on May 24.

The Tamil Nadu Pollution Control Board had issued a two-page directive last week demanding the closure of the unit citing constitutional provisions to ‘protect and improve the environment’ and ‘in larger public interest’ as its key reasons.

Further, on May 29, 2018, the State Industries Promotion Corporation of Tamil Nadu Ltd (SIPCOT) cancelled the allotment of land for the proposed expansion of Vedanta group’s copper plant in Tuticorin in larger public interest.

100 Days of Protest

• The decision to permanently close down the plant comes against the backdrop of the killing of 13 persons in police firing at an anti-Sterlite protest rally a week ago.

• The locals had been protesting for the closure of the factory for 99 days.

• On May 22, the 100th day of the protest, large-scale violence broke out in Tuticorin against the copper plant. The retaliatory police firing led to the death of 13 people.

• The action and role of the police in the entire issue has been highly criticised nationally as well as internationally.

Why were the locals protesting against the plant?

• Though protests against the plant have been going on since over two decades, they grew in intensity in the past three months after Sterlite Copper applied for approval to double the capacity of the plant to 800,000 metric tonnes per annum.

• The main cause of the protests were claims by the residents of nearby villages that the smelter caused widespread air and water pollution.

• The smelting plant was also blamed for unnaturally high cancer rates in surrounding villages.

• The residents of A Kumareddiyarpuram village in Tuticorin, in fact, complained for years about breathing and skin problems and cancer symptoms, as a result of the smelting plant.

• The agitation caught national and international attention last week when the state police opened fire on the protesters, accusing them of pelting stones, setting cars on fire and breaching the fences of government buildings.

Reaction from Vedanta

Vedanta termed the closure of the plant as an unfortunate development. The UK-based company said in a statement, “We will study the order and decide on the future course of action. We have operated the plant for over 22 years in the most transparent and sustainable way, contributing to the Tuticorin and state’s socio-economic development.”

Economic Impact of the decision

• The decision of the state government will have far-reaching economic consequences.

• The unit, which met around 40 per cent of India’s copper demand, was one of India’s largest copper producers.

• Hence, the permanent closure of the unit would have far-reaching consequences and would impact the domestic production and consumption of copper.

• The electrical and the transport sectors are two of the biggest copper consumers. So the decision is definitely going to have an impact on the ongoing electrification projects. It could also have an impact on downstream manufacturers.

• The two other copper producers in India include the state-owned Hindustan Copper and the Aditya Birla Group’s Birla Copper.

• The other major impact of the move would be on jobs. The Sterlite unit employs 3500 employees directly.

• According to the estimates of company officials, indirect jobs including vendors and contractors could take the figure up to 25000.

• Hence, the plant’s shutdown could lead to direct and indirect job losses of up to 50000.

• The shutdown is also likely to impact India’s copper exports, as around 1.6 lakh tonnes of Tuticorin plant’s production is sold internationally.

Background

• The Sterlite Copper plant is a unit of Vedanta Ltd which operates a 400,000-tonne per annum capacity plant.

• The smelting plant has been long-opposed by the local residents for polluting their environment as well as causing a range of health problems.

• In 2010, the Madras High Court had ordered a shutdown of the plant, for violating environmental regulations. The order was subsequently challenged by the group in the Supreme Court.

• The Supreme Court, in April 2013 struck down the Madras high court’s order and instead slapped a fine of Rs 100 crore on the group for polluting the environment and for operating the plant without a renewal of consents by the Tamil Nadu Pollution Control Board.

• The plant got orders for resuming operations after its owners approached the National Green Tribunal.

• The group has all along denied accusations of any wrongdoing.

About Sterlite Copper

• The company is a subsidiary of Vedanta Resources, a global UK-based metals and mining company.

• Sterlite Copper is based in Mumbai, India. It was initially launched in India, even prior to the establishment and subsequent listing of Vedanta Resources on the London Stock Exchange.

• The company operated the copper smelter plant in Tuticorin. The plant included a refinery, a phosphoric acid plant and a sulphuric acid plant.

• The company is also known to engage in the mining of bauxite, zinc ore and the production of various aluminum products as well as the manufacture of zinc ingots and lead ingots.

• The company’s main operating subsidiaries include Hindustan Zinc Limited for its zinc and lead operations, Copper Mines of Tasmania Pty Limited for its copper operations in Australia and Bharat Aluminium Company Limited for its aluminium operations.

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